1.High
P/E Stocks Outperformance Vs. Low P/E Stocks Surpasses Internet Bubble.Wisdom
Tree
But even
the best performing value factor was no contest for a market that has avoided
value stocks like the Bubonic plague. Figure 2 is my favorite chart right now.
If the
Bear Lurks, High P/E Stocks Are the Dreaded “Phone Ringers”Jeff
Weniger, CFA
Figure 2:
10-Year Rolling Annualized Outperformance, Low P/E vs. High P/E Stocks
Face it:
The amount by which high P/E stocks have outperformed low P/E stocks in the
last 10 years exceeds the amount observed at the apex of the dot-com bubble.
1.Technology Sector vs. 1999. 1995-1999
Information Technology Returned 700%
Information technology stocks have rallied 47.8% in the past
12 months, according to FactSet data. But that “still pales in comparison to
the Tech Bubble.” Over the past five years, the sector has returned 149%;
between 1995 and 1999, the sector returned nearly 700%. Meanwhile, the tech
group’s forward price/earnings ratio trades at a 22% premium to the S&P 500
now, on a relative basis, the analysts wrote, below the long-term average of
31%.
2.
Utilities are trading at the highest absolute forward P/E and highest relative
P/E to S&P 500 Value over the past 20 years:
Percy Allison Desk Strategist Jefferies LLC
Defensives
have steeply outperformed offensives:
Source: Jefferies
Trading Desk
Utilities
are trading at the highest absolute forward P/E and highest relative P/E to
S&P 500 Value over the past 20 years:
Source: Jefferies
Trading Desk
3.Coronavirus
vs. SARS
The new coronavirus and SARS come from the same family of
viruses that usually infect animals, but can sometimes evolve and spread to
humans.
Investors and analysts often compare the two viruses to gauge
the potential economic impact from the latest outbreak.
The SARS outbreak nearly 20 years ago caused China’s economic
growth to slow from 11.1% year over year in the first quarter of 2003 to 9.1%
in the following three months.
Growth in retail sales and industri al production
in China was also slower around May 2003, but expansion in exports remained
steady throughout that year.
4 charts show how SARS hit China’s economy nearly 20 years ago
Job openings have also rolled over, as you can
see in the yellow line in the chart below. On the other hand, openings remain
comfortably above the number of unemployed persons in the United States—notwithstanding
the aforementioned skills gap problem.
Sleight of Hand: Dissecting the Latest Employment DataBy Liz Ann Sonders
9.Healthcare Sector Trading at Discount to
Historical Average
As the graph below illustrates, the S&P 500 Index is trading
at a premium (>100%) to its historical average forward price-to-earnings
ratio (PE), while the broad health care space trades at a discount (<100%)
to its historical average.
It’s not clear to me why
business plans are the way they are, but they’re often misused to obfuscate,
bore and show an ability to comply with expectations. If I want the real truth
about a business and where it’s going, I’d rather see something else. I’d
divide the modern business plan into five sections:
Truth
Assertions
Alternatives
People
Money
The truth section
describes the world as it is. Footnote if you want to, but tell me about the
market you are entering, the needs that already exist, the competitors in your
space, technology standards, the way others have succeeded and failed in the
past. The more specific the better. The more ground knowledge the better. The
more visceral the stories, the better. The point of this section is to be sure
that you’re clear about the way you see the world, and that you and I agree on
your assumptions. This section isn’t partisan, it takes no positions, it just
states how things are.
Truth can take as long as
you need to tell it. It can include spreadsheets, market share analysis and
anything I need to know about how the world works.
The assertions section
is your chance to describe how you’re going to change things. We will do X, and
then Y will happen. We will build Z with this much money in this much time. We
will present Q to the market and the market will respond by taking this action.
This is the heart of the
modern business plan. The only reason to launch a project is to change
something, and I want to know what you’re going to do and what impact it’s
going to have.
Of course, this section will
be incorrect. You will make assertions that won’t pan out. You’ll miss budgets
and deadlines and sales. So the alternatives section tells me
what you’ll do if that happens. How much flexibility does your product or team
have? If your assertions don’t pan out, is it over?
The people section rightly
highlights the key element… who is on your team, who is going to join your
team. ‘Who’ doesn’t mean their resume, who means their attitudes and abilities
and track record in shipping.
And the last section is all
about money. How much do you need, how will you spend it, what does cash flow
look like, P&Ls, balance sheets, margins and exit strategies.
Your local VC might not like
this format, but I’m betting it will help your team think through the hard
issues more clearly.